The ASCAP Rate Court has ruled that the antitrust consent decree that governs ASCAP’s licensing practices (“AFJ2”) precludes ASCAP’s publisher members from withdrawing certain rights from ASCAP’s repertory.  The court granted Pandora’s summary judgment motion, holding that AFJ2 requires ASCAP to license all “works” in its repertory to any service that requests a license.  The court thus invalidated the efforts of several publishers, including Sony EMI, to withdraw “new media” rights in their compositions from ASCAP while continuing to allow ASCAP to license the same compositions to television, radio, bars, and other music users.

Sony EMI and other publishers had sought to withdraw their compositions from ASCAP and BMI in order to require Pandora and other large digital music services to negotiate direct licenses, free from judicial oversight, at rates higher than those offered by ASCAP.  Pandora, which is engaged in a rate dispute with ASCAP before the ASCAP Rate Court, objected, arguing that AFJ2 required ASCAP to offer licenses to all of the compositions in its repertory and that the “withdrawn” compositions were still in the repertory.  Judge Cote, the ASCAP Rate Court judge, agreed with Pandora, finding that the “ ‘ASCAP repertory’ is defined in terms of ‘works’ and not ‘individual rights’ in works with respect to classes of potential licensees.”  She concluded that “Pandora’s right to perform the compositions in the ASCAP repertory extends to all of ASCAP’s repertory and ASCAP may not narrow that right by denying Pandora the right to play the songs of publishers who have withdrawn new media licensing rights from certain songs while keeping the songs in ASCAP’s repertory to be licensed for performance by other music users.”

The decision leaves publishers with the choice of licensing through ASCAP or withdrawing all rights in particular works, thereby removing the work from the ASCAP repertory.  It remains unclear whether publishers will be willing to forego their share of the $800 million collected each year by ASCAP and to undertake to license thousands of music users directly.  The decision does not directly apply to BMI, but the consent decree governing BMI’s licensing practices includes very similar language that is likely to be construed the same way.

Related Posts: